At the beginning of the Revolutionary War, only a few thousand settlers lived west of the Appalachian Mountains. By the 1790s, the number was approaching 120,000. These western settlers hoped to organize their lands as states and join the union, but the Articles of Confederation contained no provision for adding new states. Congress realized that it had to extend its national authority over the frontier and bring order to this territory.

During the 1780s, all the states except Georgia gave up claims to lands west of the Appalachians, and the central government took control of these lands. In 1784, Congress divided the western territory into self-governing districts. When the number of people in a district reached the population of the smallest existing state, that district could petition, or apply to, Congress for statehood.

In 1785, Congress passed an ordinance, or law, that established a procedure for surveying and selling the western lands north of the Ohio River. The new law divided this massive territory into townships six miles long by six miles wide. These townships were to be further divided into 36 sections of 640 acres each that would be sold at public auction for at least a dollar an acre. Through the Ordinance of 1785, Congress created a system for surveying, taking a detailed measurement of an area of land, and selling the western lands. The Ordinance at first applied only to what was then called the Northwest Territory, present-day Ohio, Indiana, Michigan, Illinois, and Wisconsin. It established a system of land survey and settlement that exist into modern times.

Land speculators viewed the law as an opportunity to cheaply accumulate large tracts of land. Concerned about lawless people moving into western lands, Richard Henry Lee, the president of Congress, urged that “the rights of property be clearly defined” by the government. Congress drafted another ordinance to protect the interests of hard-working settlers.

The Northwest Ordinance, passed in 1787, created a single Northwest Territory out of the lands north of the Ohio River and east of the Mississippi River. The lands were to be divided into three to five smaller territories. When the population of a territory reached 60,000, the people could petition for statehood. Each new state would come into the Union with the same rights and privileges as the original 13 states. The Northwest Ordinance included a bill of rights for the settlers, guaranteeing freedom of religion and trial by jury. It also stated, “There shall be neither slavery nor involuntary servitude in said territory.” This clause marked the United States’ first attempt to stop the spread of slavery. The Confederation’s western ordinances had an enormous effect on American expansion and development. The Ordinance of 1785 and the Northwest Ordinance opened the way for settlement of the Northwest Territory in a stable and orderly manner.